Sir Roger Carr’s AGM 2015 speech

8 Apr 2015

Good morning everybody and welcome on what may prove to be a memorable day – not simply because of our AGM – but in choosing who runs the country for the next 5 years – so our resolutions may not be the only important votes you cast today.

I have now been the Chairman of the Company for a little over 12 months.

In brief – it has been a good year with a steady operational performance – sound strategic progress – and a record share price.

And of course – Ian King – your Chief Executive – will provide an overview of the achievements of last year later on this morning.

During the course of the last 12 months, I have visited our major sites in the UK, USA, Middle East and Australia – met with many of our major shareholders – and spent time with our customers in all domains.

In speaking to you this morning, I wanted to share some of my findings and conclusions on the business, its people and its future prospects.

First and foremost – in my travels it has become clear that whilst operating in diverse markets with a wide range of products and services – the Company is unified by its commitment to excellence – the talent of its people – pride in its achievements – and a belief in its role – protecting and serving those who serve and protect us.

Second – we are a Company that invests in its people – ensuring our reputation as a world leading engineering and technology business is strengthened for today – and underpinned for tomorrow.

Each year we recruit and train around 800 apprentices and 300 graduates – combining the finest facilities with the best of opportunities.And to capitalise on their talent and fulfil their potential – we are investing in a new state of the art training centre in Samlesbury – to be opened in the coming year.

Third – my experience as Chairman has confirmed my due diligence prior to joining – we are a Group that has considerable technical competence matched with high ethical standards.

The nature of our business is such that how we make money – is just as important as how much money we make. To that end our customers are approved by the relevant government – our products solely exported under strict regulation – and our dealings – always required to be free from corrupt practice.

And I would give you my personal assurance that I, and my Board, are totally committed to these fundamental principles.

I know, however, that some of you here today have genuine concerns about our business – and challenge not only what we do, but where we do it. There will be an opportunity for you to air any concerns you may have a little later.

And at that time I and my team will seek to answer your questions clearly, honestly and courteously.

I would ask that – in the same spirit – you reciprocate for the benefit of all other shareholders attending today.As a Board, we have had a constructive and productive year.

We have systematically reviewed in some detail each area of the business to ensure we share a clear understanding of business priorities – management bench strength – market requirements – and strategic opportunities.

We have concluded that we are particularly fortunate to have a strong geographic balance – and a healthy mix of product and services with which we serve our forces and allies across the globe.

In electronics, we have leading edge capabilities in military areas, and in the commercial avionic sector – an adjacent market with growth potential.The naming ceremony of the HMS Queen Elizabeth Aircraft Carrier in Scotland on July 4th, showcased the remarkable engineering capabilities within the company, which we expect to deploy in the building of new frigates for the Royal Navy.

In the air, enhancements to Typhoon’s capability will improve its export potential – and the outstanding performance of the aircraft was witnessed by many here at the Farnborough Air Show last summer.

Sadly, we ended 2014 in a more uncertain and dangerous world – demonstrating the ever increasing need for strong defence capabilities – important to us all. We face the future with some confidence – a strong order book, and an experienced management team.

Prospects for the business are promising – but in a turbulent world of violent conflict – budgetary constraints – volatile oil prices and changing leadership movements – at home and abroad – we are realistic about global risk.

We have already committed just under £500m in buying back our stock and we announced three acquisitions last year to add technologies and capabilities to existing businesses.

Looking forward our policy remains unchanged – and we will continue to use our cash resources in the best interest of shareholder value creation.

In the meantime we are focussed on driving down costs – preserving quality – and honing our competitive edge to ensure we are in the best position to compete in a challenging and demanding marketplace.